Stocks’ Details

Super Retail Group Limited

Broadly In-Line Performance: Super Retail Group Limited (ASX: SUL) has recently provided an update on trading performance up to this financial year and an overview of its strategy at the Macquarie Securities 2018 Australia Conference. With the insights on the performance, the stock surged up 8.61 per cent on May 03, 2018. According to release, the sales performance of the three major business segments are in line with expectations. Particularly, Supercheap Auto sales grew by 6.0% in first 43 weeks to year-to-date with like-for-like sales growth of 4.4% in the first 17 weeks of H2 FY18, driven by both transaction volume and value growth as the business benefited from expanding its customer offering of services, fitment and solutions. In rebel business segment, the sales grew by 3% in first 43 weeks to year-to-date with like-for-like sales growth of 2.2% in the first 17 weeks of H2 FY18 on the back strong growth in Apparel and footwear products. However, BCF’s like for like sales declined by 0.4 per cent in the first 17 weeks of the second half on the back of poor performance in Queensland during February and March. Given the overall scenario, the Group expects to hold full year group earnings margins in line with prior comparative period after experiencing a broadly in-line beginning to 2018, with sales growth from Supercheap Auto and Rebel offsetting negative like-for-like sales at leisure brand BCF.


Sales growth compared to prior comparative period (Source: Company Reports)

During the period, the acquisition of Macpac has been completed and it is expected to contribute $5 million to Group EBIT in the balance of the 2018 financial year. Based on current trading conditions, 2017/18 Group EBIT margin (excluding 3 months contribution from Macpac) is expected to be in line with the prior comparative period. As of now, we give a “Hold” recommendation on the stock at the current market price of $7.57.
 

Lovisa Holdings Limited

Continued Earnings Growth: Lovisa Holdings Limited’s (ASX: LOV) stock traded flat on May 03, 2018 after the release of group presentation and speech delivered by Shane Fallscheer, Managing Director, at the Macquarie Australia Conference, wherein LOV highlighted about half year financials and business strategy for future. The recent fall was partly owing to profit booking and volatility despite the group delivering a decent performance across the business during first half of the year. In the 1HFY18, LOV posted total revenue of $118.6 Mn, marking a strong growth of 18.9% on Year on Year (YoY) basis. The business enjoyed strong fashion trends during the first half of the year and the store network has increased to 320 stores trading at the end Q3FY18. EBTDA stood at $38.3 Mn in 1HFY18, up 24.3% YoY. Net profit after tax (NPAT) increased to 22.5% to $24.8 Mn with EPS of 23.7 cents per share during the first half of the year. Further, the business has continued to take an advantage of strong global trends in the fashion jewellery sector which resulted in the comparable store sales of 7.6% for the year and till the end of Q3FY18, and its total sales growth was 20.3%.


Rapid Growth Trend (Source: Company Reports)

On the other hand, the group will continue to invest in the global support structure of the business to ensure success as the international rollout. As of now, there are 53% of store network outside of Australia. Besides this, the group has appointed Mr Brett Blundy as an alternate director. Meanwhile, the stock price was up by 160.70 per cent in the past one year as at May 02, 2018 and is trading at a slightly high level. The stock was noted tumble in the interim with the resignation of the Chief Executive Officer, Steve Doyle. Given the updates and trading scenario, we give an “Expensive” recommendation on the stock at the current market price of $ 9.75.

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